Financial stuff

January 2009 Net Worth

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Many PF bloggers share their net worth and I’ve decided to do the same.  This is my net worth as of the end of January 2009.

Assets: $29,866.68

  • Cash Savings – $20,383.05
  • Stocks – $5119.35
  • Roth IRA – $4031.67
  • P2P Loans – $332.61

Liabilities: $4109.60

  • Credit Card – $4109.60

Total Net Worth: $25,757.08

It had been a very long time since I had last computed my net worth.  I was a little surprised by how much I have in cash savings.  I’ve been putting off investing more in stocks because I didn’t feel like I had enough liquid assets.  I can probably safely put some more in stocks.

My credit card debt is part of a student loan debt that I paid off with the credit card using a balance transfer offer of 3.99% for life.  I’ve seen several reports of credit card companies changing the rates or charging a $10 monthly on deals like this but so far that hasn’t happened to me.  I’m going to be sure I have enough to pay the card off in case that happens. I might pay it off in a few months anyway just to have one less thing to worry about.

I’m not including my student loans in my net worth statement.  There are a couple of reasons for this.  One is that doesn’t appear that I will have to pay on them in the near future and they may eventually be forgiven.  The other reason is that I think I will get a clearer picture of my net worth without including the student loans.  They will continue to capitalize and make my net worth appear to diminish even if I increase my assets.  I’m sure some people might not agree with leaving my student loans out of my net worth computation but I think it is better to leave them out.

How Much Have You Earned and What Do You Have to Show for It?

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The first chapter of “Your Money or Your Life” is about making peace with your past involving money. The two exercises they suggest you do to help accomplish this is to figure how much money you have made in your life and how much you have to show for it.

The easiest way to figure out how much money you have made in your life is to look at your statement of earnings from the Social Security Administration. They should mail you a statement each year. If not you can contact them to get a statement. This statement will show your earnings by year since you started working. It won’t show any earnings that weren’t subject to social security tax but it should reflect the vast majority of earnings. Once you add up all the years of earnings from the statement plus any earnings not reflected on the statement you will have a fairly accurate total of what you have earned in your life. This total might surprise you. I have made a little less than a quarter million dollars in my life. That is actually very little considering I am 41 years old. Doing this step makes it clear that I need to earn more money.

To figure out what you have to show for all these earnings you figure your net worth. You take all your assets(bank accounts, stocks, real estate, personal property, etc.) and add them together and then you subtract your liabilities(mortgage, student loans, credit card debt,etc.) to arrive at your net worth. Hopefully this will be a positive number. My net worth is negative due to my student loans but disregarding them I would have a positive number.

Now that you have both figures you can compare them. There is a good chance that your net worth seems awfully small compared to what you have earned. You can’t change the past but you can improve from here on out. If your net worth didn’t seem very small compared to your earnings than you are ahead of the game and following the steps in the book should be a snap. Next week I will post a summary of the second chapter.

Setting a Self-Imposed Deadline

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Since returning to school for the fall semester I have not had a job choosing to make all my money online. The idea was that with my free time I could increase my online income to the point where it completely replaced my job income. I did make some initial progress in increasing my income but still fell well short of replacing my job income.

This semester I only have class one day a week. This results in me having even more free time than I did last semester which should translate into getting more done. I’ve found the opposite to be the result. I’m getting almost nothing done because I don’t feel any urgency to do anything. I am a habitual procrastinator and don’t usually start working on a project until I feel the pressure of a deadline. I all have day to get things done now I just keep putting them off until I decide to do them tomorrow. When tomorrow comes the cycle repeats itself.

My idea to solve this is to give myself one month to make a dramatic improvement in productivity or I’ll get a part time job. I’ll continue to do my work online, I would just do it around my job schedule. Maybe with this deadline I will force myself to be more productive.

If anyone has any suggestions, tips, tricks, hacks, blog posts, etc. on how to increase productivity, increase motivation, or reduce procrastination I would like to hear about them.

My HSA Eligible HDHP

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Try eHealthInsurance
I switched my health insurance plan to a high deductible health plan(HDHP) that is eligible to be paired with a health savings account(HSA). My deductible only went from $5000 to $5200 a year but the policy is about $120 a year cheaper in addition to being HSA eligible. Not all health insurance with a high deductible is HSA eligible. If a health insurance plan is HSA eligible it will most likely feature that fact in the plan’s description.

I purchased my insurance through eHealthInsurance which makes it easy to compare plans. I set the search to filter out any plans that weren’t HSA eligible and then ordered the plans by price from low to high. This made it easy to find the lowest priced HSA eligible health plan. I’ve found eHealthinsurance to be very easy to use and am happy with their service and I’m not just saying that because they pay me commissions. I haven’t had any problems and needed to use their customer service yet so I can’t really comment on that.

I haven’t opened up an HSA yet. I was planning on setting up my HSA and using it to pay my health insurance premiums but I then discovered that in most instances you can’t use your HSA to pay for your health insurance. I should have done more research before I switched health insurance plans. I’ve decided to put off opening an HSA for now for a couple of reasons. The first is that I don’t need the tax deduction. My income will most likely be below taxable levels this year even without this deduction. I don’t want to tie my money up in an HSA if I’m not getting the benefit of a tax deductions as well. The other reason is that I haven’t been impressed with the HSAs available. Most of them have setup and/or monthly fees with limited investment options. These usually can be waived if you have a sufficient balance in your account but again I don’t want to put too much in an HSA if I’m not getting the benefit of the tax deduction. The HSA looks to be a great way to save money but I don’t think it will work for me right now.

If any of you have an HSA that you are happy with please let me know about it.

Former Employer Closed Out My 401(k)

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My former employer closed out my 401(k) and sent me a check for the balance.  They didn’t tell me they were going to do this but since I had a balance of $175 in the account I wasn’t surprised that they closed it.  They didn’t withold any taxes from the check.  I believe I’ll owe tax on this money unless I roll it over to a traditional IRA.  I don’t have a traditional IRA and I don’t think it is worthwhile to open one just to contribute such a small amount.  I could put the money in my Roth IRA but I’d still owe taxes on it.  I’m wondering if I will owe a penalty for early distribution.  I’m thinking I shouldn’t since I didn’t initiate the withdrawal but I’m not sure.  My thinking is that I can do whatever I want with this money as long as I declare it as income.  They didn’t close the account until this year so it shouldn’t have any effect on my 2008 taxes.  If anyone has any knowledge of whether my thinking is correct or not or has more information on this subject I’d love to hear it.